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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Worswick who wrote (828)	1/14/1998 11:11:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 9980

I heard after the faux pas in S.E Asia Moody's or S&P (don't recall which one) is snooping around India to review the credit rating.I would think twice before I shell out any money to these guys for a 'country report'.

To: Worswick who wrote (828)	1/14/1998 12:12:00 PM
From: Thomas Haegin	Read Replies (3) \| Respond to of 9980

Worswick, I agree about Moody's they gave the impression of not being much smarter than anybody else. The one comment that still seemed insightful to me was how things got rolling when the Japanese banks demanded some repayments. FWIW, this is why I think that the contagion will not spread as easily to Latin America, because there the U.S. and Spanish banks are the biggest creditors. And they seem to stand put for now as far as I can see. In general, I kind of doubt whether Moodys or any of the other agencies will ever downgrade ahead of problems. Last stunning event to this regard was how Peregring failed just like from one day to the other!! I'm sure with the right sources in the right places, they should have known informally for some time already... I think one cannot compare this event to Barings because with Peregrine it was a loan that caused them the problem, as far as I know. And with loans, you see the problem coming. At least you keep talking once maturity has expired (I mean it's a lazier business than with leveraged instruments). But when the agencies come out and downgrade before the bad news hits, the downgraded ones may make much noise, file suits for detrimental effects on their businesses, etc. In fact the downgrade may even become the self-fulfilling prophecy that sets the avalanche in motion... Therefore I think it is much easier for Moodys to act as being "surprised and stunned" like everybody else. JMHO. If anything, one is probably better advised to act when they put the party on the "Watchlist with negative implication". Again, JMHO. On bonds, you write << Watch bonds. As assets crumble so will the ratings of bonds. >> This reminds me only now of another comment Mobius made when he was in Zurich: He said he watches the prices of bonds quite closely to get hints what happens in a country, especially if they start moving without any apparent news to it. He said they often serve him well as leading indicators. I just don't know, never really cared to look for it, especially not in Emerging Markets (for no particular reason). Maybe it's a good idea. I start now to look at Taiwan and/or the Phillies. I have a Latin America fund that I may trade in for an Asian one. On Taiwan, there are two closed-ends (one is TWN, the other I forgot right now) on the NYSE. They both trade at about 15% discount to NAV. No firm opinion yet. Thomas